Fitch affirms india’s ntpc at ‘bbb-‘; outlook stable

Fitch Ratings has affirmed NTPC Limited’s (NTPC) Long-Term Issuer Default Rating at ‘BBB-‘. Electricity quotes by benjamin franklin The Outlook is Stable. Gas meter reading The agency has also affirmed NTPC’s senior unsecured rating of ‘BBB-‘ and the ‘BBB-‘ ratings on its USD4bn medium-term note programme.

NTPC’s ratings benefit from its dominant market position and regulated business model, which provides certainty of cash flows. Gas 69 The company has managed its counterparty risk well with 100% collection efficiency for the past 13 years despite the weak financial position of many of its customers. Gaston y la agrupacion santa fe The company’s high capex requirements are likely to lead to negative free cash flows over the next three to four years.

Fitch assesses that the linkages between NTPC and the Indian state (BBB-/Stable) are moderate. Gas in dogs stomach Based on the agency’s Parent and Subsidiary Linkage criteria, Fitch will provide a one-notch rating uplift to NTPC’s ratings if the company’s standalone ratings were to be lower than that of the sovereign, provided that the linkages remain intact.

Dominant Market Position: NTPC is the largest power generation company in India. Gas welder job description It accounts for about 16% of India’s total installed power generation capacity, and about a quarter of electricity generation in the country. R gas constant Out of a total installed capacity of 302GW in India, about 70% is thermal. Electricity recruitment 2015 NTPC contributes around 22% to the country’s thermal capacity.

Robust Business Model: NTPC’s ratings benefit from stable operational cash flows due to the favourable regulatory framework. Gas stoichiometry The company has long-term power purchase agreements (PPAs) for all of its plants, which allow for the pass-through of fixed costs as well as fuel costs. Power in costa rica Its revenue and profit are regulated based on invested capital and a rate of return, and incentives under a transparent regulatory cost-plus model. Gas prices under a dollar There is regulatory certainty until March 2019, the end of the current five-year regulatory tariff period.

Offtake risks are limited as the fixed costs for each plant are payable by the customer if the plant has achieved the regulatory benchmark availability, measured by the plant availability factor (PAF), which is set at 83% up to the financial year ending March 2017 (FY17) and will be reviewed thereafter. Gas after eating fruit The plant availability rates in FY16 were much higher at 92% (FY15: 89%) for the coal-based plants and 97% (FY15: 92%) for the gas-based plants. Gas density formula The current tariff block links the incentive income to achieving plant load factor (PLF) of more than 85%, instead of PAF earlier. Z gas ensenada telefono In FY16, NTPC’s coal-based power plants had an average PLF of 79% (FY15: 80%), with 11 of its 17 coal-based plants having PLFs of less than 85%. Electricity distribution vs transmission None of NTPC’s seven gas-based plants had PLFs of over 85%.

Weak Counterparties: NTPC has managed its counterparty risks well despite most of NTPC’s customers being state utilities with weak financial profiles. Quadcopter gas engine NTPC’s strong bargaining position – as the lowest-cost electricity producer and the supplier of a large share of electricity bought by the state utilities – helps to ensure timely payments. 4 other gases in the atmosphere The payables are also backed by letters of credit equivalent to 105% of average monthly payments and the tri-partite agreements between NTPC, the Reserve Bank of India and state governments. Grade 6 electricity experiments The current agreements expire in October 2016; however, NTPC expects an extension for another 10 years. Electricity notes class 10 pdf According to the management, 19 out of 29 states have already agreed to the extensions. Gas mask bong review Nevertheless, NTPC has supplementary agreements with all state utilities that allow it to have first charge over customer’s receivables in case the tripartite agreements are not extended.

High Capital Expenditure: NTPC has about 24GW of capacity under construction, with 19.8GW at the standalone level, all of which are under the cost-plus regime. Gas variables pogil The group also plans to increase its solar-based generation capacity further. Electricity voltage in norway The capex risks are mitigated as the company has strong experience in setting up power projects and by its policy of embarking on new projects only once the PPAs, allocated land, environmental clearances and fuel linkages are in place. Maharashtra electricity e bill payment NTPC’s capex is likely to remain high at around INR300bn per year for the next couple of years, which will lead to negative free cash flows. Gas vs electric dryer Fitch expects leverage (net debt/EBITDA) to remain higher than the standalone guideline of 5.0x till FY18. Storing electricity in water Leverage is likely to reduce from FY18 as more projects are commissioned and profitability increases.

NTPC plans to bid for ultra-mega power plants – of 4GW capacity each – when they are offered. M gasol nba The company also plans to acquire state-owned thermal power plants. Arkansas gas tax We expect NTPC to maintain its financial discipline while bidding for these projects. Electricity voltage in india Fitch has not factored either of these events into its ratings, and will analyse the impact if and when they materialise.

Linkages with Sovereign: Fitch assess that the linkages between NTPC and the Indian state (BBB-/Stable) are moderate. Gas news Fitch assesses NTPC’s standalone credit profile at ‘BBB-‘. Elektricity club Based on the agency’s Parent and Subsidiary Linkage criteria, Fitch will provide a one-notch rating uplift to NTPC’s ratings if the company’s standalone ratings were to be lower than that of the sovereign, provided that the linkages remain intact.

– Weakening in NTPC’s standalone credit profile due to higher-than-expected capital expenditure; a significant deterioration in its collection; unfavourable regulatory developments; and net leverage exceeding 5.0x on a sustained basis.

However, should NTPC’s standalone credit profile fall below that of India, the company will benefit form a one-notch of rating uplift due to its state linkages, provided the linkages remain intact

– Fiscal consolidation or fiscal reforms that would cause the general government debt burden to fall more rapidly than expected in the medium term

– An improved business environment resulting from implemented reforms and persistently contained inflation, which would support higher investment and real GDP growth

– Deviation from the fiscal consolidation path, causing the already high public debt burden to deviate further from the median, or greater-than-expected deterioration in the banking sector’s asset quality that would prompt large-scale financial support from the sovereign

– Loose macroeconomic policy settings that cause a return of persistently high inflation levels and a widening current account deficit, which would increase the risk of external funding stress

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